If you ship via air within the U.S., you probably recognize and can explain what a domestic air tariff is, but for many shippers, the assortment of different variables common to these pricing structures can be daunting. However, with a few guiding principles in hand, an air tariff becomes a tool to help you accurately calculate the cost of expediting.
An air tariff, at its core, is merely a pricing agreement between a shipper and transportation provider for expedited shipments. Normally, the tariff breaks up the U.S. into several regions or zones. The cost of transportation between these various zones depending on the chargeable weight and transit time requested. Here are the five key points you need to know about air tariffs:
1. What are the accessorial charges?
An accessorial is any charge that is not included in the main zone rate. Generally, air tariffs contain many accessorial charges that you wouldn’t normally find in other transportation modes. For example, pick-up and delivery fees, oversize fees, and after-hours fees, among many others. It is crucial to understand what is covered in your basic rate, and under what conditions these extra fees will be applied to your shipments. Some air accessorial fees may apply to a majority, or even all of your air freight depending on your company’s standard shipment characteristics and the language of your agreement.
2. What transportation modes are included in the tariff?
As previously mentioned, air tariffs are broken out by zone and transit time. Often, these service levels are expressed in terms of days of transit, same day, one day, two day, etc. Depending on the distance between zones and the requested speed of delivery, many different modes of transport may be able to make service. This is intended to lower your cost, but also may involve moving your shipments in modes you’d otherwise like to avoid. Ask for transparency when it comes to your provider’s modal selection.
3. Are your transit times guaranteed?
Not all air freight services are guaranteed, forgoing the guarantee will save you money in most cases, the trade off is being provided a lower level of service. Either option can work depending on your expectations; a candid discussion of your risk tolerance will help your expedited provider tailor your tariff to your needs.
4. What type of permission are you giving the forwarder in handling your shipments?
Is your product palletized? If so, can it break down? Can it be stacked? The more flexible a forwarder can be with your freight, the better the rate they can provide, but again, additional handling may cause a higher occurrence of damages, or may even void any insurance you have purchased on your goods. The permissions given should be specific.
5. What is your dimensional factor?
Everything that ships via air is charged based upon actual weight per pound, or dimensional weight, whichever is greater. The dimensional weight is calculated by multiplying length by width by height (LxWxH) divided by the dimensional factor (usually 166, 194, or 250). This number will vary amongst carriers. This is more important if your freight is generally volumetric, in which case the higher the dimensional factor, the lower your cost will be, if it is normally fairly dense, this becomes less of an issue.
Air freight tariffs, unlike some other modes of transportation, vary greatly in structure across different providers. Making sure you take into account the five questions outlined above will help you calculate your total landed cost for the service you actually want, and let you make an accurate cost comparison against both different modes and expedited providers.